EU and Canada Struggling to Reach Trade Deal

Although international economic treaty news has lately been peppered with more stories about better-known trade deals like the Trans-Pacific Partnership (TPP), there is another treaty that has been generating just as much discussion and, in some cases, animosity.

The treaty in question is the Comprehensive Economic and Trade Agreement (CETA), intended to be an agreement between the European Union (EU) and Canada. Unfortunately, while negotiators announced that they had reached an agreement on CETA back in October 2014, it has been stuck in the approval phase ever since.

During this phase, sometimes called the “legal scrubbing” phase, the text of the agreement is translated into all the relevant languages, pored over by legal and political experts, and modified slightly to ensure minimal loopholes resulting from variances in the language.

Public sentiment in several EU states, however, has been growing increasingly hostile to the treaty, and EU officials have been forced to continuously extend this period in an effort to improve public sentiment and ensure successful ratification of the agreement.

Unfortunately, those efforts have not been going entirely according to plan. Just as the European Union believed it had reached a point where ratification would be assured, Romania announced that it would not ratify CETA as a response to Canada’s refusal to lift certain visa requirements on Romanian nationals.

Romania is upset about Canada’s decision to require Romanian and Bulgarian citizens to obtain visas before visiting Canada given that citizens of every other EU state can enter the country without one. As a result, a Romanian government official (who asked to remain anonymous) told the press that Romania would "veto" the CETA ratification.

Similarly, the government of a French-speaking region of Belgium, called Wallonia, has also indicated its refusal to ratify CETA. This is despite the fact that the Belgian cabinet has already approved the EU-Canada free trade treaty. Wallonia’s reluctance to ratify the agreement could cause Belgium to back away from the agreement. Without Belgium’s approval, the agreement may fall apart.

The European Commission is worried that without the approval of Belgium and Romania, CETA may fail to obtain ratification. These developments put the EU into an area of international treaty negotiation that it has not previously explored, and the long-term legal and political consequences are uncertain. It may also add fuel to the fire of the “Brexit” movement in the UK, where a growing number of people wish to have the nation exit the EU entirely.

Under normal circumstances, the ratification of the CETA treaty should have concluded by 2016 or early 2017. At this point, it is uncertain when or if the treaty will ever be ratified.

Dr Steinbock is an internationally recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among all major advanced economies and large emerging economies. In addition to advisory activities (www.differencegroup.net), he is affiliated with India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore). For more, please see http://www.differencegroup.net/. Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore).

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